Beige Book: Economy Inches Forward
WASHINGTON (
) -- The
Federal Reserve's
beige book noted modest improvements that were more widespread than in previous reports, but persistent weakness throughout housing and job markets continued to constrain economic activity.
New York was the only one of 12 districts to note a slight increase in hiring, according to the report, which is used as a reference for the Federal Open Market Committee's meeting on March 16. The report otherwise noted continued weakness in the labor market, said pay increases were limited and added price pressures remained subdued.
The report comes after some optimistic economic data released earlier Wednesday. A February report from
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, showed that the private sector lost 20,000 jobs -- the mildest decline in two years. A separate report from Challenger, Gray & Christmas reported that job cuts fell to their lowest level in nearly four years, declining 41% in February from January.
The reports come ahead of Friday's highly-anticipated nonfarm payrolls report for February, which is expected to show a 20,000 drop in jobs and an unemployment rate of 9.8%.
Consumer spending, another area considered crucial to a sustainable recovery, also showed marginal improvement, according to the Fed's report. Holiday spending exceeded last year's levels, but consumers still spent much less in the recent 2009 shopping season than in 2007. Districts described consumers as "cautious, price sensitive and focused on necessities, but sometimes willing to spend on discretionary purchases."
Overall, home sales showed modest improvement, though the report said housing prices, home construction and nonresidential real estate conditions were hardly changed from the last report.
Loan demand was another area of continued weakness, and most districts reported continued deterioration in credit quality. Financial institutions in New York, in particular, reported a continued rise in delinquencies for all types of loans and banks in the Philadelphia reporting area noted climbing delinquencies and defaults across loan types.
Manufacturing was one of the strongest areas, with activity improving from the last report in six districts.
-- Written by Melinda Peer in New York
.
